The manufacturing sector's woes have left Prime Minister Srettha Thavisin, who took power last year, struggling to fulfil his promise of bringing average annual GDP growth to 5% over his four-year term, up from 1.73% in the past decade.
"The industrial sector has slumped and capacity utilisation has fallen below 60%," Srettha told parliament last week. "It is clear that the industry needs to adapt."
Supavud Saicheua, chairman of the state planning agency National Economic and Social Development Council, said Thailand's decades-long manufacturing-driven economic model is broken.
"The Chinese are now trying to export left, right and centre. Those cheap imports are really causing trouble," Supavud told Reuters.
"You have to change," Supavud said, arguing that Thailand should refocus on making products that China wasn't exporting while strengthening its agriculture sector. "No ifs or buts."
The factory closures between July 2023 and June 2024 increased 40% from the preceding 12 months, according to the latest Department of Industrial Works data that has not been previously reported.
As a result, job losses jumped by 80% during the same period, with more than 51,500 workers left without work, the data shows.
I believe it comes down to a difference in philosophy, the Chinese government is comfortable choosing "winning" companies and funding them, scaling them immediately to compete on the global market. It's part of their "Industrial Policy" approach. Western countries (including countries under their influence) widely refuse to support individual companies (with some exceptions) and let the market decide as they say. Both approaches come with their own inefficiency and risk.
And yes the long term vision is to break the markets. Subsidize and come in cheap, get everyone used to the new floor prices, outlast the competition, and raise the floor once they control it.
Edit - when Romney called China the US #1 geopolitical trade adversary, this is the kind of behavior he was talking about.
Western countries support individual companies constantly.
Intel received $8.5 billion in funding under the CHIPS Act
The General Motors bailout forced the US government to write off a $11.2 billion loss
Shell, ExxonMobil, and others have received countless billions in O&G subsidies
Government sales make up $49.2 billion, or 74.6% of Lockheed Martin's total sales
The entire principle of US industrial policy is that the government does nothing and everything should be outsourced to a private contractor. Inherently that must mean supporting some private companies more than others.
Your argument makes literally no sense when considering that Chinese companies consistently and notoriously sell their products in China for a fraction of the cost of the export models. BYD's Atto 3 sells for $20k in China and more than $40k in the EU, for example. Those export prices aren't subsidized. In fact, their margins are absolutely absurd.
The fact is that China has figured out industrial manufacturing and can build the same class of product for half the price... Or less. Of course, there's no reason to pass those savings onto consumers without competition, and export markets are simply less competitive than China.
#1 Chips act was entirely a direct result of China's behavior. GM and Exxon are all determined critical to maintaining national security, so of course the government will intervene with these industries, but even independent companies as tightly intertwined with the US Govt as Lockheed are not guaranteed the funding - as you said it is outsourced through bidding to the firm the government deems best equipped for whatever challenge is presented.
You may recall there was great backlash to the GM bailout. Even though the bailout was an emergency reaction and not proactive competitive support - many Americans were culturally comfortable watching that company wither. If it were BYD in the same scenario China wouldn't have even had a discussion, because the government is directly invested in it's success. Just write the check.
The type of support you're citing rarely extends to non-critical industry in western countries, while China is happy to provide investment to gain a competitive edge at any level. I'm not even arguing this is wrong, I just believe it's largely a cultural distinction.
I'm also not implying that governments the world over don't provide incentives to influence market direction, hell that's a primary role of government, but I do see it as fundamentally different approaches giving a tax cut to incentive product development vs SASAC directly sitting on many Chinese boards.
The CHIPS Act was signed in 2022.
In 2022, what were the top bleeding-edge node semiconductor fabs? TSMC (Taiwan), Samsung (South Korea), and Intel (USA). Do you see China on that list?
In 2022, what was the only company with a functioning 28nm DUV lithography machine? ASML (Netherlands).
US sanctions -- and US sanctions alone -- pushed Chinese investment into semiconductors. If you actually worked in the industry, you'd know that the Chinese government has tried for more than a decade to get Chinese companies to use Chinese semiconductor tech... To no avail. The US stabbed itself in the foot, pushed Chinese private capital into Chinese semiconductor firms (instead of foreign ones), and the rest is history. This is basic capitalist theory.
I guess you can also ignore the $15 billion bailout for airlines?
But sure, let's talk about the great backlash to the GM bailout... ignoring the Chrysler bailout. Ignoring the bailouts of JP Morgan Chase, Bank of America, Citigroup, Morgan Stanley, Wells Fargo, Goldman Sachs... All essential for national security, or so I'm told.
Let's now talk about companies in China's EV race... WM Motor, which used to outsell Tesla, is gone. Byton, gone. Aiway, gone. Levdeo, gone. Mitsubishi, gone. Honda, Hyundai, and Ford? All desperate to cut out their JVs.